Another approach is to plan out how you would pay off the debt. How long would it take you? Are you realistically able to cut your spending enough to fund repayments?

Dealing with debt yourself is only advised if you’re confident you can pay off your debts and have a decent credit rating.

The aim is to make your debts interest-free, so your repayments are all going to reducing the size of the debt. This assumes, of course, that you can afford to make repayments (if not, see the next section).

These cards can give you up to 33 months at 0% interest – although there’s usually a fee attached. You’ll still need to make minimum repayments, but these cards could provide useful breathing space.

Make sure you can pay off your debts by the end of the 0% period and don’t break the conditions of the card. Also use a soft search to be confident you’ll be approved for a card before applying, to protect your credit rating.

Contact a debt charity

Debt charities should not be seen as a last resort, but instead a source of free advice and practical assistance.

Increasingly they are trying to intervene earlier and provide advice, even if it appears your debts are not too serious.

Debt charities include StepChange and National Debtline. These are free, unlike commercial organisations, and have experts who can help you.

When you contact a debt charity, an adviser will take you through your budget and debts – this can be done on the phone, by online chat or sometimes in person.

That’s why it’s worth getting your documents together before picking up the phone.

Based on the results, they can recommend a number of different solutions.

Debt Management Plan

In this case, the debt charity contacts your creditors – such as your bank, utilities provider or council – on behalf of you. You’ll need at least some money to make repayments.

A Debt Management Plan asks your creditors to agree to a plan for repaying the debt, which typically involves lower monthly repayments then you were previously making.

This has another advantage, in that in some cases you can make a single monthly payment to the charity, which distributes the money to creditors, rather than keeping note of all repayments yourself.

Unfortunately, creditors don’t have to agree to Debt Management Plans, although most do.

You will still be required to make the regular monthly payments for priority debts such as Council Tax, gas and electricity and your mortgage or rent payments.

In Scotland, a debt charity can set up a Debt Arrangement Scheme, although this involves fees and consequences for your credit file.

Individual Voluntary Arrangement

A more formal and legally binding approach is the Individual Voluntary Arrangement (IVA), which is a form of insolvency. You’ll need at least some money to make repayments.

You make affordable monthly repayments over five to six years, at the end of which any unsecured debts are written off. If you’re a homeowner, this may help you keep your home, unlike bankruptcy.

An IVA does restrict your spending during those years and your credit rating and potentially career will take a hit. Again, creditors don’t have to agree to it.

Citizen’s Advice estimates the cost of setting up an IVA at £5,000, although it is possible to include this in your monthly payments.

If your debts are under £5,000, and you’ve got a County Court Judgement and two or more debts, you could get an Administration Order. It’s a legally-enforced debt payment plan with your creditors which is set up by a court, which takes 10% of your monthly payments.

Debt Relief Orders and Bankruptcy

If your debts are worth less than £20,000, you aren’t a homeowner and have very little left for repayments, a Debt Relief Order (DRO) could be an option.

It freezes repayments and interest for 12 months; if your financial situation hasn’t improved by then the debt is written off. It does, however, affect your credit report negatively.

Bankruptcy (which is a form of insolvency) means your debt is written off and your creditors can’t contact you.

It has several disadvantages, including the risk of losing your home and vehicle. Bankruptcy stays on your credit files for six years and going bankrupt could affect your ability to hold certain legal or financial jobs, such as being a police officer.

What’s changing this year?

2019 could see some important changes that could make life easier for those in debt.

The Government has committed to introducing a ‘Breathing Space’ scheme. This would give those in debt a set period – likely to be six weeks or longer – where creditors could no longer chase them, giving them time to get advice.

Unlike current voluntary schemes, creditors would be legally required to take part. Debt charities are also pushing for councils – who are among the most aggressive debt collectors – to be included.

The consultation on how Breathing Space will work ends in January and rules could be introduced after that point.

The Government is also reviewing the regulation of bailiffs, who have been accused of acting aggressively, although no new regulations had been announced at the time of writing.

Key contacts and resources

The organisations below provide free debt advice and are in most cases charities: